Queensland building companies operating under high-risk financial circumstances have had their licenses cancelled following a targeted investigation by the Queensland Building and Construction Commission (QBCC).
The investigation has resulted in 12 licence cancellations, including seven licensees who were more than 200 per cent over their maximum revenue limit.
In a 12 month period, licensees are only allowed to take on work valued at a certain revenue limit, depending on their asset base.
The worst licensee investigated was found with a revenue turnover of 969 per cent over its limit.
QBCC Commissioner Brett Bassett said these findings were a recipe for disaster.
“If a company is operating this far above their licence limit, and hasn’t made arrangements to apply for a limit increase, then it begs the question - how well is the company being managed?” Mr Bassett said.
“It’s like someone is driving a road train up the M1 but they only hold a learner’s licence.
“The maximum revenue limits are set based on a number of factors, including the value of a company’s assets, and they exist for a reason.
“These limits help support a growing and sustainable building construction industry and help ensure that licensees are operating financially viable businesses.”
Prior to October 2014 the QBCC required licensees to submit annual financial records, which provided an opportunity for closer monitoring of a licensee’s financial health.
This requirement was removed in 2014, so the QBCC can only rely on proactive investigations when there are suspected concerns with a licensee
This latest investigation has focused QBCC financial investigators on the high-risk licensees in the industry.
The audit saw 217 licensees investigated over the last 12 months, most of which (171) were able to provide updated financial information to support their turnover and licence conditions.
The licensee who was 969 per cent over, had a limit of $200,000 but turnover of $2.13M. This licensee was able to provide appropriate evidence to support a revenue limit increase and avoided a licence cancellation.
The 12 licensees cancelled were all breaching maximum revenue limits by at least 150 per cent.
The worst of the cancellations was an operator with a limit of $600,000 who had construction notifications worth more than $1.68M.
Mr Bassett said this is sort of financial mismanagement was risky.
“It’s risky to employees of the company, it’s risky for sub-contractors and suppliers working with the company, and it’s a risk to the local community and customers,” he said.
“Most of the licensees investigated were smaller companies with limits of $600,000 or less, but we discovered one bigger player with a maximum revenue limit of $1.9M who had an actual revenue of $12.18M.
“The QBCC requires licensees to hold minimum net tangible assets before they exceed certain revenue limits. This requirement promotes viable business practices and helps ensure a licensee is financially stable to complete a customer’s job.
“We’ve heard of unscrupulous operators chasing contracts just to secure the deposit, maintain cash flow and pay their liabilities, without ever intending to finish the job.
“If we find that happening, we will use the full force of the law to take enforcement action,” Mr Bassett said.
From next month, QBCC financial investigators will begin another audit targeting licensees who are exceeding their revenue limits.
It’s expected that at least another 200 licensees will be required to prove to the QBCC they have the assets and financial capacity to handle the contracts they’ve taken out.
Licensees who want to update their financial records are urged contact the QBCC on 139 333, or visit www.qbcc.qld.gov.au for more information.
Media contact: Chris Reid – 0418 656 244